Sony Sees Gaming Losses Growing in 2007
Wednesday January 31, 7:42 am ET
By Yuri Kageyama, AP Business Writer
Sony Sees Gaming Losses Growing This Year, Seeks to Break Even in Division by Next Year
TOKYO (AP) -- Price cuts for the PlayStation 3 video game console are among the factors Sony is studying as it seeks to break even in its money-losing gaming business next fiscal year, a company executive said Wednesday.
Startup costs for the PlayStation 3 were the main reason for the 5 percent drop in Sony Corp.'s quarterly earnings announced Tuesday. The electronics and entertainment company also said the 20 percent price cut on the game machine in Japan, announced even before it went on sale in November, hurt profits.
Sony Senior Vice President Takao Yuhara said red ink in the gaming division for the fiscal year through March could turn out to be worse than the 200 billion yen ($1.6 billion) operating loss forecast for now.
Worried investors sold off Sony shares, which fell 2.8 percent in morning trading in Tokyo.
Costs for flying in PlayStation 3 machines to the U.S., advertising and other startup expenses were higher than the company had anticipated. But Sony hopes to break even in gaming during the following fiscal year, ending March 2008, Yuhara said.
But PS3, whose predecessor PlayStation 2 dominates the sector, isn't selling as briskly as the other new console on the market, Wii from Nintendo Co., which makes Pokemon and Super Mario games.
Nintendo, which saw profits for the first nine months of the fiscal year soar 43 percent, has shipped 3.19 million Wii machines globally.